Why we need to make sure our children know how to spend

It may sound an odd concept, teaching children how to spend – we hear a lot about saving, child ISA’s have just been launched and there’s a whole plethora of savings facilities for kids; but how often do we actually talk to our children about spending money? Clearly spending and saving are intrinsically linked, but how on earth are we to encourage our children to save if they don’t know the first thing about sensible spending?

As a parent of three boys and having spent decades working for one of the country’s leading high street banks, I found it remarkable that no one had really thought about how to educate children about money and healthy spending habits. Ironically it was whilst standing in a queue in a high street bank with my young sons that I struck upon the unique idea that has led to the development of a new concept called Qwiddle.

I, like many other parents, was frustrated by the limited resources available to parents to help educate children about money. The country had just emerged from one of the worst recessions in post war history with crippling levels of debt, yet we still weren’t helping the next generation to understand the fundamentals of good money management!

As a parent I wanted to be able to help my children learn good money habits. Not just giving them a few pounds pocket money each week to spend on sweets and titbits (and junk), I wanted them to start thinking about how to set goals for things they really wanted, budget and save up for them independently.

It took several years in development and plenty of hard work since the moment of inspiration struck me but this year will finally see Qwiddle launched. A groundbreaking online facility designed for 8-15 year olds, Qwiddle lets children learn positive money management habits through saving and spending online. The site is unique, powered by PayPal and it’s free so there are no barriers to entry for families.

The emphasis is not just on spending but on educating young people to become financially responsible. This is achieved via Qwiddle’s personal promise to parents that by working together children will learn five good money habits, with each lying at the heart of Qwiddle. These include

Planning money carefully.

Working hard to get what you want.

Getting a good deal, doing research.

Thinking again before spending.

Sharing and thinking of others.

I wanted to create something that could be a starting place for families, something that triggered conversations about money at home. Parents are vital in terms of developing a generation of young people who understand how to budget and prioritise, how to save and spend responsibly. Qwiddle helps to develop these skills as it provides a space for them to manage their own money, in a hands-on way, in a safe, monitored environment.

In fact, according to research from The Money Advice Service this year, 57% agree parents are the biggest influence on development of children’s money skills, yet over half of parents say they find it hard to talk to their children about money matters. Obviously talking to your children about saving money over tea isn’t the most natural of subjects, but its amazing how easily money conversations can be woven into everyday life, for example, over a sweet at the supermarket tills or on a trip out to the cinema.

Of course as a parent myself I’m often asked how I started building sensible attitudes to money with my children and one of the first thing to say is that it’s important to start introducing the concept when they’re young. I’m not talking about tax or interest rates here! But it doesn’t harm to talk about how much a sweet might cost or a trip out. Kids are incredibly receptive and we’re talking about developing healthy habits and attitudes, so in the same way you might start encouraging them to eat vegetables, you should start to talk to them about money and spending.

Second, I believe that children need to have a plan and be guided; in short they should be encouraged to have goals. We as a generation have an unbridled desire to spend, fuelled by unscrupulous advertising all around us and our fast paced lifestyles which I affectionately refer to as the ‘coffee culture’. This relaxed approach we have to spending, be it daily cups of coffee, pre-packed sandwiches or regular meals out with the family illustrates how our spending habits have changed and how frivolous we can be. We as adults need to ensure that our children don’t learn that impulse buying is the only way, but that they should wait and sometimes save up for things they really want. Tantrums might ensue, but stick to your guns; they’ll reap the benefits when they finally do get that long awaited goal.

Third and critically, our children need to learn to take responsibility for their own money. To help children be responsible they need to practice using it! Giving children pocket money and letting them spend it is the start of the education process. Let them make their choices and then they will learn that with spending comes consequences, sometimes good, sometimes not quite so good. Equally this will help to trigger the concept of earning, help them think of ways to earn money such as small jobs and chores around the home.

Finally encourage your children to have conversations about money with family and close friends. Grandparents are a great source of wisdom and can share their own childhood aspirations with your children and in turn offer support in goal achievement whether emotional of financial.

The only way for children to start to learn the true value of money is to learn how to manage their own. That means planning, collecting, earning and then, eventually spending…

Jasmine is TLE's family editor. A writer, and mum of three young children, Jasmine has a degree in French and Italian from the University of Leeds and spent over ten years working in language services.